Author's Note. This study could not have been completed without the generous cooperation and encouragement of the Handicrafts Industries and Productive Cooperatives Organization (HIPCO). In particular, Mohamed Gamal Morsy, General Director of HIPCO, and Mohamed Nasr el Din were helpful above and beyond the call of duty. The paper also benefited from helpful comments by participants in a joint Social Science Seminar at the American University in Cairo, where this material was presented for discussion. Thanks are also due to numerous individual businessmen in both large and small enterprises who gave generously of their time.

¹ See, for example, Rural Enterprise and Nonfarm Employment: A World Bank Paper (Washington, D.C.: World Bank, 01 1978);Google ScholarChuta, E. and Liedholm, C., Rural Non-Farm Employment. A Review of the State of the Art, MSU Rural Development Paper No.4 (East Lansing, Mich.: Dept of Agricultural Economics, Michigan State University, 1979);Google ScholarEmployment and Development in Small Enterprises (Washington. D.C.: World Bank, 1978); and various publications of the International Labor Organization World Employment Program.Google Scholar

² The strengths and weaknesses of this census have been well discussed in Mabro, R. and Radwan, S., The Industrialization of Egypt, 1939–1973: Policy and Performance (Oxford: Clarendon Press, 1976), pp. 118–119.Google Scholar

³ This survey was undertaken by HIPCO, in cooperation with the Central Agency for Public Mobilization and Statistics. Some of the results of this survey have been published in World Bank documents. Details are available in the offices of HIPCO.

⁴ lnternational Bank for Reconstruction and Development, Arab Republic of Egypt: Survey of Small-Scale Industry (Washington: 12 2, 1977).Google Scholar

⁵ Other recent studies of small enterprises in Egypt include the following: Suzanne, Berger, “Problems and Prospects of Egyptian Small-Scale Industry,” 08 1978 (mimeo);Google ScholarDaniels, B. H., “Preliminary Analysis of the Feasibility of New Development Finance Institutions to Support the Small-Scale Industrial Sector in Egypt,” 12 1978 (mimeo);Google ScholarFouad, Gabril, “Industrial Estates and Their Role in the Development of Small-Scale Industries,” 06 1978 (mimeo); HIPCO, “Coordination among Agencies Concerned with Small Industries and Handicrafts, ARE,” n.d. (mimeo); HIPCO, “Vocational Training in Egypt: Coordination among Ministries and Authorities,” n.d. (mimeo).Google Scholar

⁶ At the start of the period discussed in this paper, the official exchange rate was LE I = $2.30. A second or “parallel market rate” was officially sanctioned for selected transactions. This second rate gradually gained in importance as increasing numbers of transactions came to be governed by it; at the start of 1979 it became the single unified rate, established at approximately LE I $1.45.

⁷ This figure is derived by dividing Radwan's estimate of net fixed capital stock in industry (Capital Formation in Egyptian Industry and Agriculture. 1882–1967, London: Praeger, 1974, p. 99) by Central Agency for Public Mobilization and Statistics estimates of employment in manufacturing in that year (from the Statistical Yearbook).Google Scholar

⁸ Ministry of Industry, Report on the Results of Operations of the Public Sector in Industry and Mining for 1976, Part 1 (09 1977).Google Scholar

⁹ A recent visit to a middle-sized carpentry workshop showed a labor force of 19, with 9 modern machines. At the time of the visit, 2 of these machines were in use; at a workbench, one worker was sawing a large sheet of plywood—by hand!—while another helped to hold the wood. In another visit to a large, highly mechanized enterprise with several production lines, one whole line (4 large machines) was standing idle. Its capacity far exceeded that of other stages in the production process it was designed to serve. The capable manager indicated that he was taking steps to bring these different components into balance, by expanding those currently operating as constraints. By contrast, though, in visits to 5 service centers, ranging in size from I to 8 machines. I never observed a single machine not in use.

¹⁰ Of these 22, 6 reported no change in employment, 2 reported increases, I had incomplete data. and 13 showed decreases.

¹¹ A recent consumer expenditure survey indicates that, in urban areas, as family income rises from LE 100 to LE 500 per year. expenditure on furniture rises by a factor of nearly 12, implying an expenditure elasticity of just over 3. As income rises further to LE 1.500. spending on furniture expands by a factor of 5, implying an expenditure elasticity of nearly 2. In rural areas, the largest increases in spending on furniture come at higher income levels; expenditure elasticity is below 2 over the range LE 100–500. while it is nearly 5 over the range LE 500–1.500 per year. These differences make clear once again that the effects of income growth on demand for furniture products depend crucially on who gets the additional income.

¹² Buying patterns have so far limited the effects of this shift in tastes on actual purchases. Furniture for a couple's first household is generally bought by the bride's parents, as a gift to the young couple; the choice of furniture is generally made with some consultation, but the parents are the ones who ultimately make the decision. Their tastes are often much more traditional than those of the younger generation. The result is that the effects of changing tastes are postponed, in terms of their impact on the market.